Dr Pepper Snapple Group Inc. (NYSE: DPS) reported second quarter 2014 EPS of $1.06 compared to $0.76 in the prior year period. Core EPS were $1.06, up 26 percent, compared to $0.84 in the prior year. Year-to-date, the company reported earnings of $1.84 per diluted share compared to $1.27 per share in the prior year period. Core EPS were $1.80, up 31 percent, compared to $1.37 in the prior year period.

For the quarter, reported net sales increased 1 percent as a sales volume increase, favorable product and package mix and pricing were partially offset by higher discounts and 1 percentage point of unfavorable foreign currency. Reported segment operating profit (SOP) increased 13 percent, or $47 million, due to higher net sales, favorable cost of goods trends, planned lower marketing investments of $18 million and ongoing productivity improvements.

Reported income from operations for the quarter was $348 million. Reported income from operations was $285 million in the prior year period, including $7 million of unrealized commodity mark-to-market losses. Core income from operations was $348 million, up 18 percent compared to the prior year period.

Year-to-date, reported net sales increased 1 percent and reported income from operations was $608 million, including $12 million of unrealized commodity mark-to-market gains. Reported income from operations was $482 million in the prior year period, including $14 million of unrealized commodity mark-to-market losses. Core income from operations was $596 million, up 19 percent compared to the prior year period.

DPS President and CEO Larry Young said, “As I look back on the first half of the year, there’s no question that we’ve posted strong results in a tough environment. Our teams remained focused on executing our strategy, and we’ve made good progress against our key priorities. We’re gaining distribution and availability across our key brands and packages while increasing our presence in single-serve and building our brands with innovative and targeted marketing programs.”

Young continued, “Rapid Continuous Improvement (RCI) continues to drive meaningful results, and I applaud our employees for their enthusiasm, engagement and results. I’m confident our teams will continue to execute against our plans and that we will deliver on our increased commitments for the year.”

Bottler case sales Volume
For the quarter, bottler case sales (BCS) volume increased 1 percent with carbonated soft drinks (CSDs) increasing 2 percent and non-carbonated beverages (NCBs) declining 4 percent.

In CSDs, Dr Pepper volume decreased 1 percent. Our Core 4 brands increased 2 percent driven primarily by a high-single-digit increase in Canada Dry, which was partially offset by a low-single-digit decrease in A&W. Sunkist soda and 7UP were flat in the period. Both Peñafiel and Schweppes grew double digits. Fountain foodservice volume grew 2 percent in the period.

In NCBs, Hawaiian Punch volume declined 12 percent. Snapple declined 3 percent, primarily driven by our de-emphasis on our value products. Snapple Premium increased low-single-digits, and Mott’s was flat in the period.

By geography, U.S. and Canada volume was flat, and Mexico and the Caribbean volume increased 6 percent.

Sales volume
For the quarter and year-to-date, sales volume increased 1 percent.

Beverage Concentrates
Net sales for the quarter decreased 2 percent as concentrate price increases taken earlier in the year were more than offset by higher discounts. SOP increased 5 percent as lower sales were more than offset by planned lower marketing investments of $17 million.

Packaged Beverages
Net sales for the quarter increased 1 percent on favorable product mix and an increase in contract volume, which was partially offset by declines in branded volumes. SOP increased 22 percent on favorable cost of goods trends and ongoing productivity improvements.

Latin America Beverages
Net sales for the quarter increased 24 percent reflecting higher retail pricing associated with the pass-through of the sugar tax in Mexico, favorable mix and a 6 percent volume increase driven primarily by innovation on Peñafiel. SOP increased 41 percent as net sales growth, favorable commodity costs and ongoing productivity improvements were partially offset by increases in certain operating expenses and transportation costs.

Corporate and other items
For the quarter, corporate costs totaled $70 million. Corporate costs in the prior year period were $81 million, including a $7 million unrealized commodity mark-to-market loss and a $2 million charge for the accelerated recognition of certain pension costs.

Net interest expense declined $3 million compared to the prior year period.

For the quarter, the reported effective tax rate was 35.1 percent. The effective tax rate in the prior year period was 48.0 percent, including the impact of a non-cash Canadian tax law change that increased our effective tax rate by 12.3 percent.

Cash flow
Year-to-date, the company generated $438 million of cash from operating activities compared to $295 million in the prior year. Capital spending totaled $71 million compared to $80 million in the prior year period. The company returned $363 million to shareholders in the form of stock repurchases ($206 million) and dividends ($157 million).

2014 full-year guidance
The company continues to expect full-year reported net sales to be flat to up 1 percent. The company is raising its guidance and now expects Core EPS to be in the $3.43 to $3.51 range.

Packaging and ingredient costs, including LIFO impacts, are expected to decrease COGS by 2 percent on a constant volume/mix basis.

The company expects its core tax rate to be approximately 35.5 percent.

The company continues to expect capital spending to be approximately 3 percent of net sales.

The company expects to repurchase $375 million to $400 million of its common stock.